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Read the Final Durbin Rules with Two Sets of Eyes

The Federal Reserve has given us over 300 pagesof rules about the implementation of the Durbin Amendment to theDodd Frank Act. If that wasn’t enough reading for you, there areanother 40 or so pages of an interim rule about adjustments to theinterchange debit interchange for fraud costs. The rules are notwritten very well in that we are given pages and pages of back andforth about the proposed rules and comments before we get to thefinal rules. The set up should be reversed in that we should getthe final rules, and then the supporting information later in thedocument, but that is an editorial quibble.

Regardless of how the document is structured, the industry needs toread it with two pairs of eyes. The first pair would read the rulesin the obvious way, and the second pair would read them with awhole different mission in mind.

First, the industry needs to read the rules to understand what itcan and cannot do. It needs to know what changes need to be made toits programs, which programs are protected, and figure out wherethe fights may come. (An initial read of the rules suggests thateven though these are the final rules, there may be someinconsistencies between the rules and the statute and that theremay be some court fights in the future.) A close and carefulreading of the rules will provide a map of the new paymentslandscape that will come in the wake of all of these changes.

The second pair of eyes needs to read the rules as the key to thatmap of the new landscape. When there is this much upheaval in themarket, there will be holes left in the market and newopportunities to fill the needs of the products that havedisappeared. This reading will take more time, but those who get anearly jump on it and do it well will have a chance to be first tomarket and win new business.

During the past twelve months there has been an ongoing acceleration in the pace of collaborative efforts on the part commercial banking institutions, networks and various fintech entities, to provide…

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